XI. Procurement and Contract Management

Guide to Financial Operations

XI.9 Intergovernmental Agreements

XI. Procurement and Contract Management
Guide to Financial Operations


This section provides information related to types of intergovernmental agreements and whether they are subject to the Office of State Comptroller (OSC) review and approval. Additionally, information regarding procurement record requirements and submittal requirements in the Statewide Financial System (SFS) is provided for intergovernmental agreements subject to OSC review and approval.


An intergovernmental agreement, whether expenditure or revenue, between a state agency and another governmental entity that is not a state agency and has a separate legal existence (i.e. public authority, public benefit corporation, political subdivision of the State, another state, etc.) is a contract and, as such, must receive OSC approval under Section 112 of the State Finance Law where it is valued above the threshold applicable to that agency. (See Section 2.A - Thresholds of this Chapter for additional information).


In an opinion dated June 9, 1980 (1980 Op Atty Gen 81), the Attorney General of the State of New York concluded that agencies and departments of the State may not enter into formal contracts with each other, on the basis that the two agencies have no separate or distinct legal character apart from the State. In reaching his opinion the Attorney General noted that, in the case of a disagreement between the parties to the agreement, one state agency could not sue the other, but would have to settle the dispute "inside the State government." The opinion went on to say, however, that state agencies, departments and other units may enter into interagency memoranda or "agreements" concerning matters of substance, such as "whose budget is to support what expenditures, who is to report to whom about the progress of the undertaking, who is to get the final product, if there is one, and the like." The Attorney General further concluded that such "agreements" are not formal contracts and should not contain standard contract provisions.

In light of this opinion, OSC has recognized that, since agreements between two state agencies, commonly referred to as memorandums of understanding (MOUs), are not legally binding "contracts," such MOUs do not require the Comptroller's approval pursuant to Section 112 of the State Finance Law. However, agreements between a state agency and another government entity that is not a state agency, do require the State Comptroller's approval, when valued above the threshold applicable to the state agency.

Process and Document Preparation:

The procurement record for intergovernmental agreements must include a justification of need, cost justification, and if required by the governmental entity, the board resolution authorizing the transaction from the governing body of the governmental entity entering into agreement with the State.

Process and Document Preparation Specific to the SFS:

Users will create a contract transaction in SFS in the appropriate module, using the applicable Audit Type. For transactions subject to OSC approval, users will generate and submit a Single Transaction Summary (STS) or AC 340-S with the agreement (contract) and required procurement record documents to OSC.

Guide to Financial Operations

REV. 5/26/2015